Their filings came less than two weeks after Blackstone Group went public and five months after Fortress Investment Management became the first publicly traded alternative investment manager. A slew of other such managers are said to be contemplating offerings.

Alternative investment management companies differ from traditional investment managers, such as mutual funds, in several ways. Investors are limited to wealthy people or institutions, regulatory oversight is limited, and managers get a big cut of the profits they produce.

Companies have a long history of going public just before their industry tanks. Remember dot-coms in the late 1990s?

Unlike dot-coms, which had no earnings, many alternative investment managers are almost obscenely profitable. But does that make them a good investment?

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Whether you are thinking about buying a stake in one of these firms or simply curious about the hubbub, here are answers to some common questions.

Q: What do these guys do?

A: Alternative investment management companies raise money from institutions and rich investors, and pool this capital into funds. The investors are the funds' limited partners, while the firms are the general partners and run the show. The firms might contribute some of their own capital to the funds.

Private equity firms typically use this money and then borrow more money to buy out public companies and take them private. They restructure these companies -- which often involves selling off divisions, laying off people and improving what remains -- and then sell them to another company or take them public again.

Hedge funds engage in a wide range of investment strategies, from conservative to wildly speculative. They, too, often borrow money, which amplifies their gains and losses.

Hedge funds "buy many more things, and their (holding period) is meant to be shorter," whereas private equity firms "buy fewer things for more money and anticipate holding them longer," says Warren Hellman, who runs a private equity firm in San Francisco. (Hellman says his firm does not plan to go public.)

Blackstone and KKR specialize in private equity, while Fortress and Och-Ziff are primarily hedge funds. But many firms do both.

These funds are not closely regulated by the Securities and Exchange Commission and are off-limits to small investors. The SEC requires individuals to have at least $1 million in net worth to invest in hedge funds and is trying to raise that limit to $2.5 million in investment assets. Most private equity funds require minimum investments of $5 million to $50 million.

When these firms go public, the firms themselves are regulated by the SEC; investors of any size can buy their shares (technically partnership units). But the funds they operate are still unregulated and unavailable to small investors.

Q: How do they make money?

A: Typically, these firms charge their limited partners annual management fees ranging from 1 to 2.5 percent of assets. They often levy additional fees for such activities as arranging mergers.

The big money comes from performance fees, also called carried interest, which is usually 20 percent of a fund's return. Most private equity firms collect these fees only on returns exceeding what is called a hurdle rate, typically 8 percent a year. Most hedge funds have a nominal hurdle rate, if any.

By comparison, traditional investment managers, such as mutual fund companies, typically earn 1 to 2 percent of assets per year with no additional fees.

Q: How profitable are they?

A: Very. Blackstone says its funds have earned 22.6 percent a year on average, net of fees, since its inception in 1987 through March 31, compared with 10.9 percent for the S&P 500 index.

KKR says its private equity funds have returned 20.2 percent a year on average, net of fees, since its inception in 1976 through March 31, versus 13.6 percent for the S&P 500.

Fortress says its private-equity funds have returned almost 40 percent a year since 1999, and its hedge funds have averaged 14 percent since 2002.

Q: If I buy into these companies, will I get the same eye-popping returns?

A: No. You will own a piece of the firm's fee income. You will not actually invest in their funds alongside the big guys. However, if their funds do well, you will share in the profits because of the 20 percent performance fee.

Q: Are these companies going public because they can't raise money from big institutions?

A: It's simple. These companies are coming off one of their best years ever, and the people who run them want to cash in some of their chips by selling shares to the public.

"It's high times for buyout funds and hedge funds, and they want to monetize their investments. They see dollar signs. The market is fascinated with them," Morningstar analyst Jeffrey Ptak says.

Having publicly traded stock could also make it easier to attract and retain key employees.

It also "gives them more flexible, permanent capital than they otherwise would have. But the primary impulse is opportunism," Ptak says. "Their job is judging the prevailing financial markets and exploiting opportunities. That's what they're doing here."

Q: Does this signal a market top for private equity and hedge funds?

A: Many people think so. For several years, these firms were blessed with abnormally low interest rates, relatively low stock prices and an abundance of capital. Those conditions can't last forever. Stock prices are up sharply in the past year, making bargains harder to find.

"Arguably, these people are selling at or near the top of the market, says Steven Davidoff, a corporate-law professor at Wayne State University, adding, "I thought real estate was overpriced in 1999."

Hellman says he thinks private equity is in a bubble, and so do his limited partners.

"At our investor conference we had a month ago, I said, 'How many of you think we're in a bubble?' Everybody's hand went up," he says.

David Menlow, president of IPOfinancial.com, does not think this marks a top. He says if these companies thought they were peaking, they'd be selling a lot more stock than they are.

KKR is selling only 4 percent of its stock. Its founders, Henry Kravis and George Roberts, are not selling any of their personal stakes on the initial offering, although they can sell some afterward.

Q: How have the stocks of the two companies that already went public fared?

Fortress closed Friday at $24.24, above its $18.50 IPO price. Blackstone closed at $31.50, just over its $31 offering price.

Q: Is it true these firms are not structured like regular public companies?

A: To preserve lucrative tax benefits, these firms are structured as publicly traded limited partnerships, not corporations. Investors will receive partnership units, not shares. Filing your taxes will be more complicated because you will receive Schedule K-1 instead of a 1099.

Q: Isn't Congress trying to erase these tax benefits?

A: Yes. Partnerships enjoy two big tax benefits that corporations don't. A bill in Congress would eliminate one of these benefits when partnerships go public and some lawmakers are talking about eliminating the other loophole. The bill would not apply for several years to partnerships that have already gone public, but some in Congress have objected to this grandfathering provision.

Erasing these tax breaks would hurt the earnings of these firms.

"Those are definitely things to think about as a public shareholder. But I don't think that alone should govern your investment thesis," Ptak says.

Menlow says that "if something does come out of Congress, it will be vetoed by the president" because it has "far-reaching effects that are not being discussed."

Q: Would I have the same rights as a normal shareholder if I bought these partnership units?

A: No. These firms are giving their public investors little or no voting rights. For example, they generally can't elect directors.

"If anybody is going to raise questions from an investor standpoint, if they are concerned about fairness, they shouldn't be in this stock. They have no hope of being heard. They are nothing more than navel lint," Menlow says.

Q: Does that mean investors should avoid these firms?

A: Buying them requires a leap of faith. Their financial statements are so arcane it's nearly impossible to value them with traditional yardsticks.

Morningstar has Fortress rated one star, "essentially a sell," Ptak says, because of its lofty valuation.

He says Fortress and Blackstone are trading at 30 to 40 percent of assets under management compared with less than 4 percent for many mutual fund management companies. Of course, the latter firms don't get performance fees that alternative managers do.

Davidoff says he would avoid these firms "for a lot of reasons. As a corporate-law professor, I'm offended that you don't have a vote. Second, these are risky investments and people may not be appreciating the risks involved," he says. Finally, the private equity boom "is not going to last."

Hellman, on the other hand, says he would consider buying. "Schwarzman, Roberts, Kravis, these are all moneymakers. I think they may well be good investments," he says.

Menlow says he would invest in these companies because "you can't argue with the result. The more deals they do, the more assets they have under management, the larger their fees will be."